The medical services industry is huge—measured in trillions of dollars of goods and services each year—but is highly fragmented. The overwhelming majority of goods and services are rendered by doctors' offices, clinics, pharmacies, and individual hospitals scattered throughout the United States.
Because a large percentage of the expenditures on medical goods and services are not anticipated, most people prefer to rely on insurance to bear at least a part of the cost. Health insurance has in fact come to be considered an important type of insurance to have and employers generally find health insurance for their employees and their employees' families to be an important benefit of employment. Although some employers decide to fund the insurance coverage themselves—and are referred to as “self-insured”—most businesses contract with third parties to provide medical insurance to their employees.
For those who are not employed or not part of a family of an insured employee, such as those who are retired and the indigent, government programs such as Medicare and Medicaid sometimes provide the equivalent of private insurance. Thus, the majority of the public is covered by private insurance or an equivalent government program.
From the large number of people who are covered by health insurance, through all of the many organizations who provide health care to them, comes a river of insurance claims to be processed. Currently, approximately nine medical insurance claims are processed per person per year in the United States. Both the insured and those rendering health care depend on the efficient processing of these claims for payment for those services. In many cases the insured individuals will assign their right to collect payment from the insurance carrier to the service providers.
Because of their substantial and widespread dependence on revenues from insurance companies, the service providers have taken over the task of filing the claims on behalf of their insured patients to make certain that the claim is properly made and timely payment is received. Naturally, there is widespread use of computers and software to assist in this task.
The process of obtaining reimbursements from a health insurance company for services rendered to patients must be both effective and administratively easy to implement because of the number of claims that need to be made and the large proportion of their revenue dollars that comes back to service providers from health insurance companies. However, electronic claim filing is complicated by the fact that each payer has its own requirements for a proper claim.
Typically, in the past, heavy use has been made of the mail system and facsimile machines to file paper claims. Since the early 1970's, however, proprietary software systems have been developed by individual payers that tie into the software systems operated by the service provider (generally referred to as “practice management systems”) to facilitate electronic filing of claims. Practice management systems are in some cases capable of generating the electronic equivalent of the standard Health Care Financing Administration (HCFA) 1500 claim form and transmitting it electronically via a modem and telephone network. However, using systems that are capable of filing claims with only single payers is a piecemeal approach to the overall problem of filing claims in health care practice management where the patients are insured by a number of payers.
A different approach in claim filing has come into widespread use by service providers. This approach relies on intermediate parties, known as clearinghouses, which receive billing files from service providers, sort them by payer, edit them to create claims in the appropriate format for each payer, and request payment from payers on behalf of the service providers. Some clearinghouses receive the billing files as print images from service providers and convert them to an electronic format for further processing and transmission to the payers. Accordingly, Clearinghouses relieve service providers of the burden of meeting the formatting requirements of multiple payers; however, their service comes with an associated cost and introduces a delay in receipt of payment.
Relatively recently, payers have enabled service providers to connect to the payer's web site via the internet for transmission of claims. However, this approach is not practical when a large number of claims is involved.
Thus, there remains a need for a better way for service providers to file claims as automatically as possible with several payers.